EU Commissioner for Environment
No sustainable development without better governance and a green economy
EU High level side event at CSD-19
"Leveraging financial resources for the green economy"
New York, 11 May 2011
A global green economy can help achieve sustainable development, ensure lasting prosperity and make a significant contribution to the eradication of poverty. Success at Rio next year will depend on the identification of and agreement on the conditions necessary for the transition to the green economy and better governance.
Establishing the proper regulatory and market conditions, and increasing private sector involvement will be essential for this transformation. These can act as the drivers of change – enabling growth in what could become the green economy's key growth markets: water, renewable energy, sustainable land use, ecosystems services.
These areas of the green economy have the potential to underpin economic development, create jobs and help to eradicate poverty – whilst at the same time helping to protect and improve the state of the environment.
Regulatory and market conditions will have to be put into place. This will include positive fiscal incentives, the removal of environmentally harmful subsidies, and many more. But what is also essential is the availability of financial resources. To create a global green economy, large scale financial resources – both public and private – will have to mobilised. This will apply to all countries at all stages of economic growth, albeit in different ways.
The UNEP study on the Green Economy estimates that the global scale of investments needed could be around 2% of global GDP per year in the period up to 2050. The exact figures are not critical here. What we must recognise is the scale of financing that will be needed.
In other words, financing the transition to the green economy will require an enormous shift in approaches to financing – based on new public and private solutions. Traditional reliance on public funds alone will not be enough. Instead, public financing will have to be complemented by and, where appropriate, catalyse and leverage much greater private investment.
Incentives will have to be put into place to encourage sustainable investments, as well as to promote equity, insurance and pension funds to invest in sustainable development. Access to finance and venture capital coupled with a favourable regulatory environment will be particularly crucial to stimulate eco-innovation and green SMEs.
New ways of mobilising financing will have to be found, which, at the same time, build on existing structures. This will be challenging and will require significant structural and conceptual change – yet without it, the transition to the green economy will not happen.
By this I mean the need to discuss with all relevant partners how current practices of development cooperation might encourage further private investment. We will have to look at all financial sources and ensure they are mutually supportive.
The European Commission is determined to contribute to making Rio+20 a success, and we believe that mobilizing financial resources and increasing private investments are both essential ingredients for that success.
Ladies and Gentlemen,
Let us take this opportunity to reflect and discuss - at a preliminary stage - the road to Rio+20.
We can already see that the transition to the green economy will require new a massive change in financial thinking and structures if we are to mobilise and leverage private investors and funds.
What we have to start doing now is to imagine – and plan – what these financial "architectures" could be like – and what they should try to achieve in practical terms, as well as on the scale needed for the transformation to the green economy.
I now hand over to our distinguished speakers to get the debate started. Thank you.